Broad policy decisions in education can be framed around a simple question: Do the benefits to society of investing in an educational strategy outweigh the costs?

We provide an answer for those individuals who currently fail to graduate from high school. The present cohort of 20-year olds in the US today includes over 700,000 high school dropouts, many from disadvantaged backgrounds. We investigate the economic consequences of improving their education.

First, we identify five leading interventions that have been shown to raise high school graduation rates; and we calculate their costs and their effectiveness. Second, we add up the lifetime public benefits of high school graduation. These include higher tax revenues as well as lower government spending on health, crime, and welfare. (We do not include private benefits such as higher earnings). Next, we compare the costs of the interventions to the public benefits.

We find that each new high school graduate would yield a public benefit of $209,000 in higher government revenues and lower government spending for an overall investment of $82,000, divided between the costs of powerful educational interventions and additional years of school attendance leading to graduation. The net economic benefit to the public purse is therefore $127,000 per student and the benefits are 2.5 times greater than the costs. If the number of high school dropouts in this age cohort was cut in half, the government would reap $45 billion via extra tax revenues and reduced costs of public health, of crime and justice, and in welfare payments. This lifetime saving of $45 billion for the current cohort would also accrue for subsequent cohorts of 20-year olds. If there is any bias to our calculations, it has been to keep estimates of the benefits conservative. Sensitivity tests indicate that our main conclusions are robust: the costs to the nation of failing to ensure high school graduation for all America’s children are substantial. Educational investments to raise the high school graduation rate appear to be doubly beneficial: the quest for greater equity for all young adults would also produce greater efficiency in the use of public resources.

A report issued recently by the Business – Higher Education Forum asserts that we can increase the number of US college graduates in math and science by increasing the number of qualified teachers in those fields. However, these are among the most difficult teaching positions to fill, creating a catch-22:

To make teaching a viable career choice, the report proposed a package of financial incentives, including scholarships, signing bonuses, loan forgiveness, housing subsidies and differential pay to teachers who work in high-demand subjects or those willing to work in high-poverty school systems, where shortages are being felt most acutely. link

Differential pay, except on the basis of credentials and experience, is of course a topic of constant controversy. It would not be fair, certainly, to lock in science teachers at a permanently higher rate of pay simply because they are in short supply. However, signing bonuses are a practical way of addressing the real market forces that drive people who would otherwise choose K-12 education into other professions. These signing bonuses can be renewed each year as long as there is a shortage.

Public-sector employment policy often suffers from an inability to respond to market realities. If we set as fixed the qualifications required for a certain job, we will have to vary the salary of this job in order to attract qualified candidates, who can and will pursue private-sector work if the pay is higher. If instead we fix the salary at a level that isn’t competitive with private-sector employment, the qualifications will have to be flexible, based on the applicant pool. When there is a shortage of qualified applicants, this policy leads to a lower-quality workforce in education, higher rates of exodus to the private sector, and a stronger perception that teaching is merely “something to fall back on.”

Shortages of well-trained math and science teachers create a domino effect of problems across the United States, said Linda Darling-Hammond, a professor at Stanford University’s School of Education.

Because math and science often are not taught well, the nation’s schools are producing math-phobic citizens who increasingly are unprepared to pursue higher level math and science instruction in college, Darling-Hammond said. As a result, she said, there are far too few majors in those fields in college, which means schools are competing with the private sector for fewer college graduates with a math or science degree. And because teachers earn much less on average than programmers or engineers, graduates often opt for the higher-paying jobs.

“There isn’t a shortage of teachers in this country; there’s a shortage of people who are willing to work for too little salary and in poor working conditions,” Darling-Hammond said.

“We must ask ourselves why we have these recurring problems, and why other nations with whom we compete do not,” she added. “What do other nations do, and what would it take to create a foundation for excellence in mathematics, science, and technology education here?”

Darling-Hammond said high-achieving countries that rarely experience teacher shortages–such as Finland, Korea, Japan, Taiwan, Singapore, and Germany–have made substantial investments in teacher training and equitable teacher distribution in the last two decades. link

The panel pointed out, though, that salary and working conditions are not the only opportunities to recruit more STEM (Science, Technology, Engineering, and Mathematics) teachers:

College graduates in the STEM disciplines might not even consider teaching a possibility unless it is brought to their attention, said Valdine McLean, a science teacher at Pershing County High School in Nevada, who said she majored in biology in college and never thought of teaching until she took a career placement exam that displayed “science teacher” at the top of the list. link

The article goes on to point out the importance of retention as well as recruiting. This brings us back to the importance signing bonuses, including those offered on a recurring basis.

Will teachers in low-shortage fields such as language arts and social studies be happy with signing bonuses and other incentives for STEM teachers? Probably not, but it may be time to challenge the longstanding assumption that experience and education are the only valid bases for differential pay.